Hi All,
I am a little concerned about the home loan interest rates in Australia, and now have the opportunity to lock into a very competitive rate. I can see that the rates will get back to where they were before the GFC, and see this could add another 300 basis points to current rates, so this is my dilemma. Do I lock in or not?
The issues within the EU are looking pretty grim , and I can see more and more EU republics putting there hands-up for a bailout as there are many countries that have similar economies like Greece. These problems could easily slow our economy and put less pressure on the RBA to lift the rates in future, as did the US Bad Loans etc.
The plan is to lock in the Home Loan and not the Investment Properties, as I can always adjust my rent to suit to a certain extent, but I cannot adjust my income.
Anyway, any positive feedback would be appreciated.
Thanks,
If you are worried on current rates, you should not get into property investing. It is still below average.
No. Over the long term, the additional cost of fixed rate has proven to be not worth it.
ambosh wrote:No. Over the long term, the additional cost of fixed rate has proven to be not worth it.Not always. You just need to do the sums and see what works out best for you in your situation. There are many variables to consider.
Cheers
Paulit depends on your situation… can be your friend or enemy
You can also fix a certain percentage of your loan, gives you more options if you are going to fix
I fixed our home loan for one year only, sitting in an offset account still reducing our principal.
It is doubtful that anybody will be able to give you accurate advice on where interest rates are headed…we can only advise based on the information we've had in the last year. This doesn't indicate what is set to happen in the future. Case in point: back in March there was an article in the papers where a number of RE agents were questioned regarding property prices, interest rates etc. Most of them thought prices would drop further, and virtually all of them commented in some manner that interest rates were going to keep going down.
I had a couple of friends predict interest rates could hit 1% or even 0%. Guess what? They were all wrong. And so was I. I didn't fix back in the days it was cheap, and BASED ON CURRENT RATES AND INFO, I'd say that if you didn't lock in a rate by the final quarter of last year, you're already too late. Interest rates are sure to increase, but in my opinion not by too much more. IMHO, 8% bank rates will be the tipping point for plenty of buyers. Move a little more than that and there'll be huge issues for FHB. Until the economy is well and truly on its way (which could take the next 2-3 years assuming another major economy bubble ala China doesn't burst), interest rates should hover around 8%.
Now, let us all sit back and see how wrong the above prediction will be in the coming months.
BTW, if you don't mind me asking, what sort of fixed rates are you able to get?
Historical retail average is around 7.5%, which is also where the Fed has stated they'd like it. Some suggest that anything below the historical average is worth fixing. In my opinion it's not that simple.
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